JC Master Legal News Issue 894

Key Takeaways for This Issue

The Shanghai and Shenzhen Stock Exchanges have issued interim guidelines on information disclosure for asset-backed securities.

On November 1, the Shanghai and Shenzhen Stock Exchanges each issued the “Guidelines on Information Disclosure for Temporary Reports of Asset-Backed Securities.” In recent years, the exchanges have continuously refined the institutional framework for asset-backed securities, strengthened frontline supervision and risk management, and ensured the high-quality, steady growth of corporate asset-securitization activities, thereby further enhancing their ability to serve the real economy.

Interpretation of the “Announcement of the State Taxation Administration on the Issuance of the Measures for the Administration of Non-Resident Taxpayers’ Enjoyment of Treaty Benefits”

Recently, the State Taxation Administration issued the “Administrative Measures for Non-Resident Taxpayers’ Enjoyment of Treaty Benefits,” revising the previous “Administrative Measures for Non-Resident Taxpayers’ Enjoyment of Tax Treaty Benefits” and changing the requirement for non-resident taxpayers to submit supporting documentation at the time of filing to a system of record‑keeping for inspection.

The Ministry of Finance is soliciting public comments on the draft amendment to the Accounting Law.

Recently, the Ministry of Finance has publicly solicited opinions from the public on the “Draft Amendment to the Accounting Law of the People’s Republic of China (Exposure Draft).” The Ministry is revising the Accounting Law of the People’s Republic of China with the aim of implementing the requirements of governing the country in accordance with the law and ensuring that accounting information is of high quality, thereby enabling the accounting profession to better serve economic and social development.

Blockchain-based smart contract technology has been put into practical use, with the Beijing Internet Court achieving the nation’s first “one-click case filing” for enforcement proceedings.

Recently, in an enforcement case, the Beijing Internet Court leveraged the judicial blockchain “Tianping Chain” to embed a smart contract on the chain, successfully initiating automatic enforcement proceedings for the nation’s first mediation agreement. This marks the practical application of blockchain-based smart contract technology.

Regulations for the Implementation of the Food Safety Law of the People’s Republic of China

Premier Li Keqiang of the State Council recently signed a State Council decree promulgating the revised Regulations for the Implementation of the Food Safety Law of the People’s Republic of China, which will take effect on December 1, 2019.

Table of Contents

Table of Contents

Finance & Capital Markets

The Shanghai and Shenzhen Stock Exchanges have issued interim guidelines on information disclosure for asset-backed securities.

The Shanghai Stock Exchange continues to attract foreign investment into A-shares, fostering a win-win ecosystem in the capital market.

Deloitte has released a research report reviewing the Hong Kong Stock Exchange’s 2018 ESG implementation.

Continuously strengthen oversight of private equity funds, refine the regulatory framework for private equity funds, and advance the optimization of tax policies.

The China Banking and Insurance Regulatory Commission has issued the “Notice on Strengthening the Supervision and Administration of Commercial Factoring Enterprises.”

Corporate & Commercial

Acquisition of France’s Linxens Group Enables Unisoc to Strengthen Its Chip Industry Chain Strategy

Kangmei Pharmaceutical’s transfer of its stake in GF Fund has been finalized, with GF Securities’ shareholding increasing to 60%.

Plans to Acquire Jinhai Titanium Industry and Xianghai Titanium Industry; Lubbei Chemical May Be Involved in a Major Asset Restructuring—Trading Suspended Starting from the 4th.

Leading biodiesel company Excellence New Energy has launched an investor roadshow, with continued investment in R&D and promising prospects for future growth.

Haohai Bio Listed, Marking the Birth of the First “H‑plus STAR Market” Biopharmaceutical Company

Taxation

Interpretation of the “Announcement of the State Taxation Administration on the Issuance of the Measures for the Administration of Non-Resident Taxpayers’ Enjoyment of Treaty Benefits”

Interpretation of the “Announcement of the State Taxation Administration on Further Simplifying the Procedures for Handling Tax Administrative Licensing Matters”

The Ministry of Finance is soliciting public comments on the draft amendment to the Accounting Law.

In the first three quarters, nationwide cumulative tax and fee reductions totaled RMB 1.7834 trillion, easing the burden on businesses and lowering innovation costs.

Weihai Municipal Finance Bureau of Shandong Province: Adopting Multiple Measures to Boost the Transition from Old to New Growth Drivers

Litigation & Arbitration

Notice of the Ministry of Justice on Issuing the “Opinions on Promoting Lawyers’ Participation in Public Interest Legal Services”

Blockchain-based smart contract technology has been put into practical use, with the Beijing Internet Court achieving the nation’s first “one-click case filing” for enforcement proceedings.

After failing to recover his wages, he resorted to stealing property from his employer’s home as “compensation.”

The leased premises do not meet the requirements for operating an educational institution; the request to terminate the contract was dismissed.

As “Double 11” approaches, numerous e-commerce platforms are offering specially discounted “foreclosure properties,” while judges warn of bidding risks.

Other

The revised Regulations on the Implementation of the Food Safety Law will take effect in December, with penalties now explicitly tied to “individuals.”

Finance & Capital Markets

The Shanghai and Shenzhen Stock Exchanges have issued interim guidelines on information disclosure for asset-backed securities.

On November 1, the Shanghai and Shenzhen Stock Exchanges each issued the “Guidelines on Temporary Disclosure of Information for Asset-Backed Securities” (hereinafter referred to as the “Temporary Disclosure Guidelines”). In recent years, the two exchanges have continuously refined the institutional framework for asset-backed securities, strengthened frontline supervision and risk management, and ensured that corporate asset-securitization activities have maintained high-quality, steady growth, thereby further enhancing their ability to serve the real economy.

The “Interim Information Disclosure Guidelines” exhibit the following key features in terms of content and requirements: First, they strengthen the accountability and timeliness obligations of information disclosure entities, stipulating that fund managers and rating agencies are direct disclosure obligors, while participating institutions such as original right holders and key cash‑flow providers have ancillary obligations, thereby enhancing the timeliness and transparency of disclosures. Second, they refine and expand the scope of information disclosure for material events. Third, they clarify the procedural requirements for significant matters and improve the framework for interim disclosures, further standardizing processes related to underlying asset repurchases, holder meetings, securities exercise rights, and trading suspensions and resumptions, thus providing investors with richer reference information to support their investment decisions. Fourth, drawing on experience from credit‑bond regulation, they have developed model formats for interim reports.

According to reports, since the implementation of the filing system at the end of 2014, the Shenzhen Stock Exchange’s corporate asset-securitization business has grown steadily, with cumulative issuance exceeding RMB 870 billion. The Shanghai Stock Exchange began work on drafting the Guidelines as early as 2018 and subsequently sought feedback from market participants and relevant authorities on multiple occasions. Throughout the consultation process, managers, original right holders, investors, and other stakeholders all afofficeed the necessity of developing the Guidelines and their significant role in enhancing the quality of information disclosure for asset-backed securities, improving the overall disclosure framework, and strengthening investor protection. At the same time, they submitted proposed revisions addressing specific details related to the disclosure requirements for interim reports.

The newly issued “Interim Guidelines on Information Disclosure” reflects the Shanghai and Shenzhen Stock Exchanges’ commitment to further enhancing the quality of information disclosure and strengthening the information‑disclosure framework for asset‑backed securities. These measures will help reinforce the principal responsibility of market participants in providing accurate and timely disclosures, raise awareness across all stakeholders, and enable investors to make more informed investment decisions while improving the risk‑management capabilities of market participants.

The Shanghai Stock Exchange continues to attract foreign investment into A-shares, fostering a win-win ecosystem in the capital market.

 On October 31, the “Shanghai Stock Exchange International Investors Conference,” hosted by the Shanghai Stock Exchange and supported by the Shanghai Municipal Financial Work Bureau, opened in Shanghai. Wu Qing, Member of the Standing Committee of the CPC Shanghai Municipal Committee and Vice Mayor of Shanghai, along with Huang Hongyuan, Secretary of the Party Committee and Chairman of the Board of the Shanghai Stock Exchange, attended the opening ceremony and delivered remarks. Representatives from the China Securities Regulatory Commission, the State Administration of Foreign Exchange, the National Council for Social Security Fund, the Shanghai Municipal Financial Work Bureau, the Securities Association, the Fund Association, as well as prominent domestic and international market institutions, also attended and spoke at the event. The conference drew nearly 300 heads of investment and trading operations from professional investment offices both within and outside China.

The conference will focus on key topics such as the development of Shanghai as an international financial center, the opportunities and challenges of A-share internationalization, innovative developments in the exchange‑traded bond market, and asset allocation strategies for long‑term international investors. In addition, a series of roundtable discussions will be held on emerging trends in the new economy, the opportunities and challenges facing Chinese securities offices amid capital market opening, the sharing of investment insights among domestic and foreign institutional investors, the future prospects of wholly foreign‑owned fund management entities, new growth opportunities in the ETF market, 5G and financial technology, and pension‑fund investments—aiming to foster enhanced communication and collaboration between international investors and their domestic counterparts.

According to reports, this conference is the highest‑level, largest‑scale, and most geographically and institutionally diverse international investor event ever hosted by the Shanghai Stock Exchange. In recent years, China’s economy has maintained steady, sustained growth, attracting widespread attention from overseas investors. As domestic capital market rules and regulations continue to improve, market efficiency keeps rising, and the range of market tiers and investment‑financing products expands, a growing number of foreign professional investment institutions have flocked to invest in China. Consequently, the shareholding ratios of foreign investors have steadily increased, and trading volumes have continued to expand, making them an increasingly significant force in the A‑share market. Since the introduction of the QFII scheme in 2002 and the RQFII scheme in 2011, China’s capital market has accelerated its opening-up. In recent years, with the successive launch of the Shanghai–Hong Kong Stock Connect, the Shanghai–London Stock Connect, and the China–Japan ETF Mutual Access Program, it has become even more convenient for overseas investors to access the A‑share market.

The SSE has consistently prioritized services for international investors and worked to enhance their participation in the Shanghai market. Since 2014, the Exchange has established a dedicated team to serve overseas institutional investors. In addition to engaging annually with more than a hundred delegations of foreign investors, it has organized, over several consecutive years, a series of flagship initiatives such as “International Investors Visit the SSE” and “International Investors Visit Shanghai‑listed Companies,” while also conducting tailored promotional roadshows targeting different regions abroad. Following the launch of the STAR Market this year, the SSE further hosted a series of events, including the “SSE Listed Companies’ Overseas Investor Relations Management Workshop,” thereby establishing an effective communication framework to help listed companies better understand the needs of overseas investors and deepen engagement and dialogue with them.

In addition, the SSE’s service team for overseas institutional investors regularly provides international investors with a comprehensive overview of the latest developments across the exchange’s various business lines, and disseminates publicly available data and information on QFII, the Shanghai–Hong Kong Stock Connect, and the STAR Market. This has effectively promoted awareness of China’s capital market development and opening-up achievements, while also creating favorable conditions for overseas investors to gain a deeper understanding of A‑shares.

The Shanghai Stock Exchange stated that, in response to the ongoing wave of China’s financial sector opening-up, it will continue to enhance its service framework for overseas investors, steadily attract foreign capital to participate in the A-share market, advance the opening of China’s capital markets, and foster a healthy market ecosystem that delivers mutual benefits to all stakeholders.

Deloitte has released a research report reviewing the Hong Kong Stock Exchange’s 2018 ESG implementation.

One of the Big Four international accounting offices, Deloitte, recently released its latest research report, “Hong Kong Stock Exchange ESG Implementation Review 2018,” which provides an in-depth analysis and interpretation of ESG disclosure practices among companies listed on the Main Board of the Hong Kong Stock Exchange.

ESG Guidelines refer to the Environmental, Social, and Governance Reporting Guidelines revised by the Hong Kong Stock Exchange in 2015. These guidelines require companies to disclose ESG reports and progressively elevate certain indicators to a “comply or explain” standard. Since then, Deloitte China has conducted an annual review and analysis of ESG information disclosure by Hong Kong‑listed companies.

The recently published “Hong Kong Stock Exchange 2018 ESG Implementation Review” surveyed over 300 companies, analyzing their ESG reporting across four dimensions—“strategic integration,” “institutional framework,” “issue management,” and “disclosure format.” It also assessed general information and substantive content related to corporate governance structures and environmental and social issue disclosures, aiming to illuminate the current state of ESG information disclosure among Hong Kong‑listed offices. The report offers recommendations to help companies enhance value creation, integrate sustainability into management, and improve disclosure practices, thereby supporting them in meeting sustainability‑related compliance requirements and providing guidance for further advancing their sustainability performance.

Xie An, Deputy Managing Partner for Deloitte North China and Head of Risk Advisory for the region, stated: “The importance of ESG risks and governance cannot be overlooked. Integrating ESG into the governance framework enables more effective identification and a more comprehensive assessment of ESG risks, thereby advancing the implementation and refinement of ESG management and ensuring the concrete execution of corporate ESG strategies. For companies seeking to grow stronger and larger, it is essential to continuously enhance their sustainable development management, align with global trends, and progressively refine and realize their sustainability objectives.”

The report notes that, for companies listed in Hong Kong, the integration of ESG strategies largely remains at the aspirational level, with no well‑defined, quantified medium‑ to long‑term objectives yet in place. Most offices still formulate ESG strategies passively, driven primarily by regulatory requirements, and view them as a tool for brand communication, lacking substantive, actionable ESG targets. At the institutional level, corporate governance mechanisms are insufficiently extended to the board‑level, and many companies lack robust governance frameworks. Fewer than 20% disclose the board’s involvement in ESG risk discussions or its setting of ESG goals; only a handful have established formal ESG management systems, clearly defining personnel appointments, roles and responsibilities, and decision‑making procedures. On the issue‑management front, compliance has improved markedly and stabilized, with companies adopting a cautious approach to negative information disclosure. However, with respect to the disclosure recommendations outlined in the HKEX’s May 2019 Consultation Paper on the Guidelines, overall reporting remains uneven. The majority of companies have yet to fully align with the revised requirements set out in the consultation paper, particularly in areas such as environmental target management, climate change, and environmental and social risks within supply chains.

Gu Ling, Partner in Deloitte China’s Risk Advisory Sustainability Services, noted: “Driven by increasingly stringent regulatory requirements and a markedly heightened awareness among issuers of these obligations, companies’ overall compliance performance improved significantly in 2018. Nevertheless, substantial gaps remain for most organizations. Deloitte advises corporate governance bodies to fully recognize the risks and opportunities that ESG presents for business development, continuously refine their ESG governance and management frameworks, and proactively prepare for the new compliance requirements outlined in the Hong Kong Stock Exchange’s consultation paper on the Guidelines. Additionally, companies should develop sustainability roadmaps tailored to their specific stage of development, providing long-term guidance while regularly assessing and reviewing progress.”

Continuously strengthen oversight of private equity funds, refine the regulatory framework for private equity funds, and advance the optimization of tax policies.

To continuously guide private equity offices in enhancing their standardized operations, the China Securities Regulatory Commission (CSRC) organized its local branches to conduct special inspections of 497 private equity institutions in the first half of this year. The CSRC stated that it will further steer the industry toward higher-quality development, refine the regulatory framework for private equity funds, and advance efforts to optimize tax policies.

The China Securities Regulatory Commission stated that this inspection focused on trading compliance, liquidity risk, and the risk of illegal fundraising; the business operations and fund flows of private equity institutions engaged in cross‑regional activities; the extent of product nesting; the effectiveness of systems for business segregation and risk isolation; as well as practices such as self‑financing and self‑assumption of risk and conflicts of interest.

This inspection revealed that, thanks to guidance and development over the past few years, the industry’s overall level of compliant operations has improved. Through these inspections, the securities regulatory bureaus have urged private equity management offices to further refine and optimize their organizational structures, compliance and risk‑control frameworks, and financial management systems; they have also promoted policies supporting venture capital funds, guiding institutions to better serve the real economy and fully leverage the positive role of private equity funds in the multi‑tiered capital market.

At the same time, this inspection also revealed that certain private equity offices continue to engage in illegal and non-compliant practices. Specifically, some offices are suspected of serious violations such as illegal fundraising and misappropriation of fund assets; others have been conducting “funding‑pool” activities—raising new capital to repay existing investors and engaging in maturity mismatches—thus deviating from the fundamental nature of private equity funds; and still others have engaged in prohibited fundraising practices, including public marketing, soliciting non‑qualified investors, and making guarantees of principal and returns.

In response to the issues identified during targeted inspections, the China Securities Regulatory Commission has, in accordance with the law, imposed administrative regulatory measures on the relevant institutions, initiated formal investigations, or referred suspected criminal and unlawful leads to public security authorities or local governments. At the same time, the CSRC has recorded these violations and the regulatory actions taken in the capital market integrity database.

The China Securities Regulatory Commission (CSRC) has pointed out that the private equity fund industry is an integral part of the multi-tiered capital market, playing a vital role in supporting innovation and entrepreneurship, serving the real economy, and meeting society’s needs for wealth management. The CSRC emphasized that it will further guide the industry to enhance the quality of its development. On the one hand, it will resolutely implement the CPC Central Committee and the State Council’s strategic plans to win the battle against major risks, continuously strengthen regulatory oversight of private equity funds, steadily improve risk monitoring and early‑warning capabilities, and rigorously investigate and punish illegal and non‑compliant activities, thereby effectively safeguarding investors’ legitimate rights and interests. On the other hand, it will continue to provide robust support to the industry by refining relevant laws and regulations, promoting more favorable tax policies, deepening the sector’s opening-up to the outside world, and fostering a professional culture characterized by legality, compliance, integrity, and diligence, thus continually enhancing the ability and effectiveness of private equity funds in serving the real economy.

The China Banking and Insurance Regulatory Commission has issued the “Notice on Strengthening the Supervision and Administration of Commercial Factoring Enterprises.”

To standardize the business practices of commercial factoring enterprises and strengthen regulatory accountability, the China Banking and Insurance Regulatory Commission recently issued the “Notice on Strengthening the Supervision and Administration of Commercial Factoring Enterprises” (hereinafter referred to as the “Notice”). The Notice provides guidance to local authorities on enhancing ongoing and post‑event supervision of such enterprises across six key areas: operating in compliance with laws and regulations, reinforcing oversight and management, steadily advancing classified disposal measures, rigorously controlling market access, ensuring robust local regulatory responsibilities, and optimizing the business environment.

An official from the China Banking and Insurance Regulatory Commission stated that, at present, the number of commercial factoring offices is excessive and their quality is uneven; the priority should be to digest existing stock, rectify disorderly practices, and standardize market order. Accordingly, a key provision of the Notice is to strengthen market access management: pending the issuance of formal regulations on market access, the registration of new commercial factoring enterprises shall, in principle, be suspended; for cases where establishing new entities is genuinely necessary, local financial regulatory authorities are required to establish a consultation mechanism with market supervision agencies to reach a consensus.

To address the existing stock of non‑compliant commercial factoring enterprises, the Notice requires each financial regulatory bureau to establish a leading group for the cleanup and standardization of the commercial factoring industry, to study and resolve major issues within its jurisdiction, to formulate relevant policies and measures, and to strengthen operational guidance. The goal is to complete the cleanup and standardization of all existing commercial factoring enterprises by June 30, 2020, and to report the results to the China Banking and Insurance Regulatory Commission.

With regard to the specific criteria for handling existing commercial factoring enterprises, the Notice stipulates that such enterprises shall be categorized into three types—normal operations, abnormal operations, and operations involving violations of laws or regulations—based on their operational risks and any instances of non‑compliance. A prudent and orderly approach shall be adopted to implement classified treatment of these existing entities. Specifically, for enterprises that cooperate with regulatory oversight, maintain a business presence at their registered location, and have fully submitted all required information through the “Commercial Factoring Information Management System” or an information system designated by the local financial regulatory authority, the local financial regulatory bureau, after submitting the cases to the China Banking and Insurance Regulatory Commission for review, will publicly disclose them in batches and phases, include them on the regulatory roster, and exercise supervision in accordance with applicable laws and regulations.

In addition, while addressing existing risks, the Notice also imposes strict controls on new entrants, requiring local financial regulatory authorities to coordinate with market supervision agencies to rigorously regulate the registration and establishment of commercial factoring enterprises. Where new establishments are genuinely necessary, a joint consultation mechanism must be established with the market supervision authorities. Registration addresses and equity changes are subject to stringent oversight, and cross‑provincial, autonomous region, municipality directly under the central government, or separately listed city transfers of registered addresses are prohibited.

In addition, the Notice sets forth specific regulatory indicators for commercial factoring enterprises, establishing standards for concentration risk, related-party transactions, classification of non‑performing assets, provision‑setting requirements, and leverage ratios, while maintaining the Ministry of Commerce’s requirement that risk‑weighted assets not exceed ten times net assets.

Commercial & Corporate

Acquisition of France’s Linxens Group Enables Unisoc to Strengthen Its Chip Industry Chain Strategy

On October 31, Unisoc announced that it plans to acquire, through the issuance of shares, the 100% equity interest in Unisoc Liansheng held collectively by Unisoc Shencai, Zijin Haihuo, Zijin Haiyue, Hongfeng Capital, and Xinhua Investment.

Upon completion of this transaction, Tsinghua Unigroup Microelectronics will control the Linxens Group by holding 100% of its equity and will indirectly hold 95.43% of the Linxens Group’s equity.

It is reported that the Linxens Group, a large multinational corporation headquartered in France, specializes in the R&D, design, manufacturing, packaging and testing, and sales of micro‑connectors. Its products are primarily used in the smart security‑chip sector and have, in recent years, expanded into other core segments of the supply chain, including RFID inlays, antenna and module packaging, and testing. Today, Linxens’ key customers span a wide range of industries, such as telecommunications, finance, transportation, hospitality, e‑government, and the Internet of Things.

Linxens Group’s key customers include globally renowned smart card manufacturers, chip design companies, and module producers. Its products are sold worldwide, with end‑use applications spanning telecommunications, finance, transportation, e‑government, the Internet of Things, and other industries and sectors.

Ziguang Guowei stated that, through this transaction, the company will secure a more secure and stable supply of high-performance microconnectors, further strengthen its position within the industry chain, and gain access to Linxens Group’s cutting-edge R&D capabilities and advanced manufacturing technologies.

Linxens Group has accumulated more than 30 years of process‑technology expertise, establishing industry‑leading product quality and design capabilities, thereby further enhancing the listed company’s product competitiveness. The company can leverage Linxens Group’s overseas sales channels and customer relationships to expand its international operations, increasing market share and global competitiveness.

In its announcement, Ziguang Guowei stated that upon completion of this transaction, the company’s asset base, revenue, and profitability will all see a significant boost, further strengthening its industry standing and enhancing its risk resilience. The target company, Ziguang Liansheng, will become a wholly owned subsidiary of the listed company, and Linxens Group’s micro‑connectors, RFID inlays, and antenna businesses will be fully injected into the listed entity. By leveraging the listed company as a core business platform to further integrate upstream related assets, this move will help reduce related-party transactions and mitigate the risk of direct competition with the controlling shareholder and its affiliates.

Kangmei Pharmaceutical’s transfer of its stake in GF Fund has been finalized, with GF Securities’ shareholding increasing to 60%.

Recently, the China Securities Regulatory Commission issued an approval document regarding the change of equity in GF Fund Management Co., Ltd. According to the announcement, following review, the transfer of a 9.458% stake in GF Fund held by Kangmei Pharmaceutical to GF Securities has been approved.

Following this equity change, GF Securities’ stake in GF Fund will increase to 60.59%. According to GF Securities’ semi-annual report, as of the end of June, the office held a 51.135% equity interest in GF Fund.

This means that, after nine months, the equity‑change process for GF Fund has officially been approved. Kangmei Pharmaceutical stated that, based on data as of September 30, the transaction is expected to generate pre‑tax gains of RMB 750 million to RMB 850 million for the company.

In fact, in addition to Kangmei Pharmaceutical, another shareholder of GF Fund—Xiangjiang Financial Holdings—has also put its equity stake up for transfer. According to an announcement on the Beijing Equity Exchange, 15.763% of GF Fund’s shares are being offered for sale, with Xiangjiang Financial Holdings as the seller. The reserve price is RMB 1.81 billion, and the listing period runs from September 18 to November 15, spanning 40 business days. Based on this reserve price, GF Fund’s valuation stands at RMB 11.483 billion.

The announcement indicates that Xiangjiang Financial Holdings currently holds 15.763% of the total equity in GF Fund. In other words, Xiangjiang Financial Holdings intends to divest its entire stake.

Information released on September 18 indicates that the shareholders of GF Fund are GF Securities, FiberHome Technologies, Xiangjiang Financial Holdings, ST Kangmei, and Kejin Holdings, holding respective stakes of 51.135%, 15.763%, 15.763%, 9.458%, and 7.881%. Under the priority subscription option, the status is listed as “Existing shareholders have not waived their rights,” suggesting that the current shareholders of GF Fund may exercise their preemptive rights to acquire additional equity in the fund.

In addition, publicly available data show that as of the end of June, the total assets under management (AUM) of public funds managed by GF Fund amounted to RMB 445.23 billion, down 4.96% from the end of 2018. Excluding money market funds and short-term wealth-management bond funds, the AUM stood at RMB 195.519 billion, ranking the office eighth in the industry. In the first half of the year, the company reported operating revenue of RMB 1.547 billion and net profit of RMB 595 million.

Plans to Acquire Jinhai Titanium Industry and Xianghai Titanium Industry; Lubbei Chemical May Be Involved in a Major Asset Restructuring—Trading Suspended Starting from the 4th.

Following the completion of the mixed‑ownership reform of its controlling shareholder, Lubei Group, Lubei Chemical has announced new developments in the capital markets. On November 1, the company disclosed that it is planning to acquire 100% of the equity interests in Shandong Jinhai Titanium Industry Resource Technology Co., Ltd. (Jinhai Titanium) and Shandong Xianghai Titanium Resource Technology Co., Ltd. (Xianghai Titanium). The company’s shares have been suspended from trading as of the opening of the market on the morning of November 4, with the suspension expected to last no more than 10 trading days.

The announcement indicates that Shandong Lubei Enterprise Group Co., Ltd. (hereinafter referred to as “Lubei Group”) and Hangzhou Jinjiang Group Co., Ltd. (hereinafter referred to as “Jinjiang Group”) hold 66% and 34% of the equity in Jinhai Titanium Industry, respectively, while Lubei Group holds 100% of the equity in Xianghai Titanium Industry. The company plans to acquire 100% of the equity in Jinhai Titanium Industry by issuing shares and paying cash to Lubei Group and Jinjiang Group, and to acquire 100% of the equity in Xianghai Titanium Industry by paying cash to Lubei Group.

The counterparties, Lubei Group and Jinjiang Group, are both affiliated parties of the company. Lubei Group is the company’s controlling shareholder, while Jinjiang Group is the second-largest shareholder of Lubei Group. Accordingly, this transaction will constitute a related-party transaction. The company also anticipates that the transaction will fall within the scope of a major asset restructuring as defined in the Measures for the Administration of Major Asset Restructurings of Listed Companies.

At the beginning of this year, Lubei Chemical acquired a 51% stake in Jinyi Technology, a subsidiary of its second-largest shareholder, the Jinjiang Group, for RMB 266 million. In the interim report this year, Lubei Chemical posted substantial growth in both revenue and profit, with revenue up 91.28% and net profit up 88.79%. The recently released third-quarter report further shows that, over the first nine months, the company’s operating revenue reached RMB 923 million, a year-on-year increase of 90.89%, while net profit attributable to shareholders of the listed company stood at RMB 143 million, up 66.08% from the same period last year.

“Although the company’s sales revenue from cement, raw salt, and other products has increased, the consolidation of Jinyi Technology is the key factor behind the substantial improvement in its financial performance,” said a source familiar with Lubei Chemical. Since last year, Lubei Chemical has been actively engaging in the capital markets, and after years of steady development, the company may now be poised for a period of rapid growth.

Leading biodiesel company Excellence New Energy has launched an investor roadshow, with continued investment in R&D and promising prospects for future growth.

On October 31, Longyan Zhuoyue New Energy Co., Ltd. (hereinafter referred to as “Zhuoyue New Energy”) issued an announcement regarding the issuance plan and preliminary bookbuilding for its initial public offering on the STAR Market. As a leading domestic enterprise in biodiesel production and waste cooking oil treatment, Zhuoyue New Energy, which had previously maintained a low profile, has attracted significant attention from the investment community.

Founded in November 2001, Zhuoyue New Energy is an efficient resource‑recycling enterprise that integrates the comprehensive utilization of waste oils and fats to research, develop, produce, and market biodiesel and its derivative products—including industrial glycerin, bio‑ester plasticizers, and waterborne alkyd resins. Its products are widely used in clean‑energy applications and bio‑based green chemicals, thereby enabling the harmless disposal and resource‑oriented utilization of waste oils and fats.

Zhuoyue New Energy has become China’s leading biodiesel company, boasting the highest production volume, the largest export share, and robust innovation capabilities.

The core business is characterized by steady expansion in operating scale.

The announcement indicates that Zhuoyue New Energy has experienced rapid revenue growth over the past three years, with a compound annual growth rate of 29.75%. Its core business is divided into three major segments: biodiesel, biomass-based plasticizers, and industrial glycerin. In 2018, its revenue reached RMB 1.018 billion. From a business‑segment perspective, the company’s principal operations have accounted for more than 99% of total revenue in each of the past three years, underscoring its strong core‑business capabilities.

From 2016 to 2018, Excellence New Energy posted rapid growth in both revenue and profitability. In 2018, the company reported revenue of RMB 1.018 billion, up 16.6% year over year; net profit reached RMB 134 million, a year-on-year increase of 106.3%; and non‑GAAP net profit stood at RMB 134 million, up 123.1% from the prior year. In 2018, the company’s three core products—biodiesel, bio‑ester plasticizers, and industrial glycerin—accounted for 85.57%, 11.15%, and 3.11% of total revenue, respectively.

In 2016, Excellence New Energy overcame key technological bottlenecks and began exporting to Europe. Its flagship product, biodiesel, obtained EU ISCC certification in the second quarter of 2016 and subsequently entered mass export markets. By 2018, exports accounted for more than 85% of total biodiesel sales, while the company’s operational scale continued to expand steadily.

In 2018, Excellence New Energy procured and processed over 220,000 tons of waste oils and fats, achieving an annual biodiesel output exceeding 220,000 tons—accounting for more than 20% of China’s total annual biodiesel production. Its annual industrial glycerin output surpassed 7,000 tons, while its bio‑ester plasticizer production reached 23,000 tons. In 2019, the company plans to add an additional 30,000 tons of waterborne alkyd resin capacity.

Industry leader benefiting from favorable policies

According to the REN21 Global Status Report on Renewables 2018, China’s annual biodiesel production from 2016 to 2017 was approximately 880,000 tons. Currently, Excellence New Energy produces over 220,000 tons of biodiesel, accounting for more than 20% of the national output. It is the largest biodiesel producer and seller in China and also the country’s leading biodiesel exporter.

Biodiesel, as a “green energy” source, boasts three major advantages—renewability, cleanliness, and safety. Promoting the development of the biodiesel industry holds significant strategic importance for China’s sustainable economic growth, advancing energy substitution, alleviating environmental pressures, and curbing urban air pollution.

Utilizing waste oils and fats to produce biodiesel represents an innovative technological pathway for China’s development of renewable energy. Producing biodiesel from waste feedstocks not only addresses the safe collection and utilization of these materials at the upstream stage but also provides downstream industries with an environmentally friendly, sustainable resource, yielding multiple environmental and social benefits. As such, this sector is one that the nation urgently needs to vigorously promote.

The state has addressed this issue in both the 12th and 13th Five-Year Plans, with a long time frame and a dense sequence of policy initiatives. Industry insiders believe that, supported by favorable policies, Zhuoyue New Energy can expect rapid growth in the coming years.

High R&D standards drive the company’s growth.

Notably, Excellence New Energy boasts a stable R&D team and continues to ramp up its R&D investment.

The company currently employs 89 R&D personnel, accounting for 20.84% of its total workforce. Among them, 28 hold mid‑level or senior professional titles. Its core research team is the longest‑established and most experienced in China in the development of biodiesel application technologies.

The company’s R&D expenditures are primarily allocated to advancing applied technologies and conducting fundamental research in its production processes, improving and optimizing existing production technologies, processes, and equipment, conducting adaptability studies for various waste‑oil processing methods, and carrying out foundational research on key production‑process technologies. Additionally, these funds support product‑quality enhancement initiatives and the development of new products, with the aim of improving product performance and introducing innovative products and technologies.

In recent years, Zhuoyue New Energy has steadily increased its R&D investment, which rose from RMB 31 million in 2014 to RMB 48 million in 2018, reflecting a five-year compound growth rate of 9.14%. The proportion of R&D expenses to operating revenue has generally been on the rise. A stable R&D team and sustained investment have enabled the company, since its inception, to continuously overcome challenges, achieve numerous technological breakthroughs, and successfully commercialize them.

Hao Hai Bio Listed, Marking the Birth of the First “H+ STAR Market” Biopharmaceutical Company

On October 30, Shanghai Haohai Biotechnology Co., Ltd., a leading Chinese enterprise in the biomedical materials sector (hereinafter referred to as “Haohai Bio,” stock code “688366”), was listed on the STAR Market, becoming the first biopharmaceutical company to adopt an “H‑plus‑STAR” dual‑listing structure.

Among the pharmaceutical companies that have so far been accepted for review and listed on the STAR Market, Haohai Bioscience ranked first in both 2018 revenue and profit. On its debut trading day, Haohai Bioscience opened at RMB 149.30 per share, up 67.32% from its IPO price of RMB 89.23 per share.

According to available information, Haohai Bioscience is a technology‑driven enterprise that leverages biomedical materials and genetic engineering technologies to research, develop, manufacture, and market medical devices and pharmaceuticals. The company has consistently focused on four rapidly growing segments within the medical biomaterials market, spanning ophthalmology, aesthetic medicine, orthopedics, and surgery. Supported by an integrated management approach that combines technological innovation with robust marketing, Haohai Bioscience has become a well‑known player in China’s medical biomaterials sector and was listed on the Main Board of the Hong Kong Stock Exchange via an H‑share offering on April 30, 2015.

Hao Hai BioScience issued 17.8 million shares, raising RMB 1.588 billion. After deducting issuance expenses, the net proceeds amounted to RMB 1.529 billion, which will be primarily allocated to the construction of the “Shanghai Hao Hai BioScience International Pharmaceutical R&D and Industrialization Project.” This initiative will steadily strengthen the company’s new‑product development and expand production capacity for its existing product lines, including medical sodium hyaluronate, medical chitosan, and topical recombinant human epidermal growth factor, thereby meeting growing market demand. As one of the key players in Shanghai’s cutting‑edge science and technology innovation ecosystem, Hao Hai BioScience is also the first company from the G60 Science and Technology Innovation Corridor in Songjiang, Shanghai, to list on the STAR Market.

Taxation TAXATATION

Measures for the Administration of Preferential Treaty Treatment for Non-resident Taxpayers Have Been Issued and Will Take Effect as of January 1, 2020.

To deepen the “delegation, regulation, and service” reform, further optimize the tax-related business environment, and enhance the convenience with which non-resident taxpayers access treaty benefits, the State Taxation Administration issued the Measures for the Administration of Treaty Benefits for Non-Resident Taxpayers (hereinafter referred to as the “Measures”) on October 22, which will take effect on January 1, 2020.

Treaty benefits refer to the reductions or exemptions from corporate income tax and individual income tax liabilities that are available under a tax treaty, as prescribed by domestic tax laws.

The Measures stipulate that tax authorities at all levels shall conduct follow-up administration over non-resident taxpayers’ eligibility for treaty benefits, ensure the accurate application of treaties, and guard against treaty abuse and tax‑evasion risks. Non‑resident taxpayers and withholding agents shall cooperate with the competent tax authorities in the follow-up administration and investigations related to the enjoyment of treaty benefits. If neither the non‑resident taxpayer nor the withholding agent provides the required documentation as requested by the tax authorities, or if they evade, refuse, or obstruct the tax authorities’ follow-up investigations, and the competent tax authority is unable to verify whether they meet the conditions for enjoying treaty benefits, such taxpayers shall be deemed not to satisfy those conditions.

Interpretation of the “Announcement of the State Taxation Administration on Further Simplifying the Procedures for Handling Tax Administrative Licensing Matters”

In order to earnestly implement the State Council’s decisions and arrangements on deepening the “delegation, regulation, and service” reform and optimizing the business environment, and in accordance with the requirements of the General Office of the State Council’s Notice on Issuing the Division of Key Tasks for the National Teleconference on Deepening the “Delegation, Regulation, and Service” Reform and Optimizing the Business Environment (Guobanfa [2019] No. 39), the State Taxation Administration has formulated the “Announcement of the State Taxation Administration on Further Simplifying the Procedures for Handling Tax Administrative Licensing Matters” (hereinafter referred to as the “Announcement”).

I. Background to the Issuance of the Announcement

On August 1, 2019, the General Office of the State Council issued the “Division of Key Tasks for the National Teleconference on Deepening the ‘Delegation, Regulation, and Service’ Reform and Optimizing the Business Environment,” which stipulated that “for retained licensing matters, the scope, conditions, and procedural steps must be clearly defined item by item, and any aspects that can be simplified should be streamlined to the greatest extent possible.” To implement the requirements of this State Council document, further deepen the reform of the administrative approval system, and provide greater convenience to applicants in handling tax-related administrative licensing matters, it is necessary to further streamline the procedures for processing such licenses.

II. Main Contents of the Announcement

(1) Shortening Processing Time

The Notice specifies shorter commitment-based processing deadlines for certain tax administrative licensing matters, in addition to the statutory 20-working-day deadline.

1. The processing time for three matters—the approval of taxpayers’ applications for extension of filing deadlines, the approval of the maximum invoicing limit for special VAT invoices (VAT tax control system), and the determination of alternative methods for paying corporate income tax in advance other than based on actual profits—has been shortened from 20 working days to 10 working days.

2. The processing deadline for the approval of taxpayers’ applications to amend their tax quotas has been shortened from the statutory 20 working days to 15 working days (including a 5-working-day period for public notice of the revised quota).

3. The time limit for tax authorities to process the aforementioned permit matters on an extended basis will be shortened from the statutory 10 working days to 5 working days.

It should be noted that the above‑mentioned commitment deadlines are standard provisions. Where the State Taxation Administration has already established shorter processing deadlines for matters handled by taxpayers who file returns under their real names, newly registered taxpayers, and other such categories, those shorter deadlines shall apply.

(II) Streamlined Application Documents

1. Streamlining reporting requirements. The Notice has removed the “Legal Representative (Person in Charge)” field from the Tax Administrative Licensing Application Form, as this information can now be retrieved from the information system. It has also eliminated the “Contact Address” fields for both the handling officer and the authorized agent, retaining only the applicant’s “Address and Postal Code” field (which may include an address for service by mail).

2. Consolidation of application forms. Previously, when taxpayers applied for an extension of the filing deadline or an extension of the tax payment deadline, they were required to complete, in addition to the “Tax Administrative Licensing Application Form,” separate forms—the “Application Approval Form for Extension of Tax Payment Deadline” and the “Approval Form for Extension of Filing Deadline.” These forms contained certain duplicate items, such as applicant information. Under this Notice, the requirement to submit the “Application Approval Form for Extension of Tax Payment Deadline” and the “Approval Form for Extension of Filing Deadline” has been eliminated, with the essential content of these forms incorporated into the “Tax Administrative Licensing Application Form,” thereby reducing the administrative burden on applicants.

(3) Reduce the submission of materials

1. Streamline the application materials required for taxpayers seeking approval to defer tax payments. First, applicants are no longer required to submit separate documents such as a report requesting a deferral of tax payments, proof of current cash balances, or budgetary expenditure estimates for employee wages and social insurance contributions—instead, these details are to be provided by applicants in the “Tax Administrative Licensing Application Form,” along with their stated reasons for the request. Second, applicants are no longer required to furnish records of tax payments for the preceding three consecutive months or balance sheets; such information will be automatically verified by the tax authorities through the tax administration information system.

2. Reduce the application materials required for taxpayers seeking approval to file returns late. Applicants are no longer required to submit a separate statement explaining the genuine difficulties preventing timely filing; instead, they may simply state their reasons in the “Tax Administrative Licensing Application Form.”

(4) Simplified Service Procedures

To further streamline the service of process, the Notice provides for a more convenient method of service and acknowledgment when tax administrative licensing documents are served directly to the applicant at the tax service window and the applicant raises no objection. Specifically, a “Acknowledgment Section” is added to the end of the tax administrative licensing document, where the recipient or other legally authorized person signs or affixes a seal and indicates the date of receipt; a separate “Tax Document Service Acknowledgment Form” (including fields such as “Name of Document Served,” “Recipient,” “Place of Service,” “Recipient’s Signature or Seal,” “Reason for Receipt by Proxy and Proxy’s Signature or Seal,” and “Reason for Refusal by Recipient”) is no longer required. Except in the aforementioned circumstances, where service is effected at locations other than the tax service window, by detention, or through delegation, the “Tax Document Service Acknowledgment Form” must still be completed.

(5) Update relevant documents

The templates for tax administrative licensing documents and the itemized list of tax administrative licensing items attached to the “Announcement of the State Taxation Administration on the Publication of Matters Relating to Tax Administrative Licenses That Have Been Canceled” (State Taxation Administration Announcement No. 11 of 2019) have been updated in accordance with the various streamlining measures set forth in the Announcement and are hereby republished as attachments to the Announcement.

The Ministry of Finance is soliciting public comments on the draft amendment to the Accounting Law.

Recently, the Ministry of Finance has publicly solicited opinions from the public on the “Draft Amendment to the Accounting Law of the People’s Republic of China (Exposure Draft)” (hereinafter referred to as the “Exposure Draft”). The Ministry is revising the Accounting Law of the People’s Republic of China with the aim of implementing the requirements of governing the country in accordance with the law and ensuring that accounting information is of high quality, thereby enabling the accounting profession to better serve economic and social development.

Compared with the current Accounting Law, the draft for public comment revises the original seven chapters and 52 articles into six chapters and 60 articles, covering general provisions, accounting records, accounting supervision, accounting institutions and personnel, legal liabilities, and supplementary provisions. A total of 39 articles have been amended, 11 new articles have been added, 2 articles have been deleted, 1 article has been merged, and 11 articles have remained unchanged.

First, in the General Provisions section, in response to the latest developments in government accounting reform, the scope of financial accounting reports requiring standardization is clearly defined as including corporate financial accounting reports, financial reports and final accounts reports of government accounting entities, financial accounting reports of private non‑profit organizations, and financial accounting reports of other accounting entities. Furthermore, in light of relevant changes arising from government institutional reform and military reform, the administrative management system for accounting has been further streamlined.

Second, in the accounting measurement section, economic transactions requiring accounting treatment are summarized at a high level according to the principal financial statement line items, thereby highlighting the common requirements applicable to both corporate and governmental accounting entities. Taking full account of the hierarchical positioning and division of responsibilities between the Accounting Law and lower-level regulations such as accounting standards, certain detailed provisions in the Accounting Law pertaining to accounting measurement—such as specific methods for correcting errors in accounting vouchers—have been deleted. In addition, principled requirements for accounting informatization have been introduced; meanwhile, recognizing the impact of information technology on accounting processes, certain provisions have been revised to accommodate both manual bookkeeping and IT‑enabled environments.

Third, in the section on accounting oversight, to ensure that internal controls effectively regulate accounting practices and enhance the quality of an entity’s accounting information, overarching requirements have been added regarding the establishment and implementation of such controls. Building on the “three-in-one” accounting oversight framework—optimizing government regulation, social oversight, and internal accounting supervision—both the scope of internal accounting oversight and that of fiscal‑department oversight have been refined. To address persistent challenges in accounting oversight, the fundamental relationship between government operational oversight and governmental accounting supervision, along with the corresponding procedures for handling it, has been clarified. Furthermore, from the perspective of safeguarding the social oversight role of accounting offices, provisions have been introduced prohibiting entities or individuals from interfering with or obstructing the normal conduct of an accounting office’s professional activities.

Fourth, in the section on accounting institutions and accounting personnel, mandatory provisions governing the organization of accounting work within entities have been revised to invigorate internal accounting management; the scope of entities required to appoint a chief accountant and those permitted to do so has been clarified, with further safeguards for the chief accountant’s statutory duties; in line with the “delegation, regulation, and service” reform, the eligibility criteria for heads of accounting institutions (accounting supervisors) have been relaxed; management of accounting personnel authorized to sign has been strengthened, and a requirement has been added for financial officers and heads of accounting institutions (accounting supervisors) to register their appointments; in response to emerging trends in social governance, overarching requirements have been introduced for self-regulatory organizations established in accordance with the law—comprising accountants and accounting institutions—to engage in self‑regulation and provide self‑service.

Fifth, in the section on legal liability, in accordance with the principle of equal rights and responsibilities, the scope of accounting violations has been further clarified, and these violations have been appropriately categorized based on factors such as the motives and consequences of the misconduct, thereby enhancing the practicality of accounting enforcement and oversight. The accounting liability framework has been refined by introducing civil liability for accounting matters, in addition to the existing administrative and criminal liabilities. Penalties for violations have been strengthened: within the administrative penalty regime, a provision mandating the confiscation of illegal gains has been added—implementing a “confiscate first, then impose a fine” approach—and the amounts of monetary penalties have been suitably increased. Moreover, provisions imposing legal liability on agency bookkeeping offices have been introduced, and safeguards for the legitimate rights and interests of accounting professionals have been enhanced through the inclusion of employee‑liability exemption clauses.

Sixth, in the supplementary provisions, explanations have been added for terms such as the nationally unified accounting system and agency bookkeeping; to meet the needs of opening up to the outside world, authorization has been granted to the financial department of the State Council to establish special regulations governing accounting administration related to financial activities—such as the issuance of securities by foreign institutions within China; and, in response to cross-border regulatory requirements, authorization has been provided for the financial department of the State Council to establish mechanisms for cross-border cooperation in the supervision and administration of accounting and auditing.

In the first three quarters, nationwide cumulative tax and fee reductions totaled RMB 1.7834 trillion, easing the burden on businesses and lowering innovation costs.

On October 30, the State Taxation Administration held a press conference to release statistics on tax and fee reductions. According to the data, during the first three quarters, the nationwide cumulative total of new tax and fee cuts reached RMB 1.7834 trillion, including RMB 1.5109 trillion in additional tax reductions and RMB 272.5 billion in reduced social security contributions.

Tax burdens across all industry sectors have declined.

Cai Zili, Executive Deputy Director of the Tax Reduction Office of the State Taxation Administration and Director-General of the Revenue Planning and Accounting Department, stated that the newly introduced tax reductions comprise RMB 703.5 billion from the value-added tax reform, RMB 182.7 billion from universal policies benefiting small and micro enterprises, and RMB 442.6 billion resulting from the combined effects of the two‑step personal income tax reform.

In the first three quarters, tax burdens across all industrial sectors declined to varying degrees year on year. Specifically, the manufacturing sector saw additional tax reductions totaling RMB 473.8 billion, accounting for 31.36% of the total new tax cuts, with its tax burden falling by 1.08 percentage points compared with the same period last year. The wholesale and retail trade sector recorded additional tax reductions of RMB 325.8 billion, representing 21.56% of the total, and its tax burden decreased by 3.27 percentage points year on year. Meanwhile, the construction, transportation, warehousing, and postal services sectors together benefited from additional tax reductions amounting to RMB 117.9 billion, or 7.8% of the overall total.

Effectively stabilizing economic development expectations

Cai Zili stated that since the implementation of tax and fee reduction policies, the tax authorities have conducted a preliminary analysis of their effects. The findings indicate that these measures are increasingly contributing to stabilizing economic development and boosting innovation and entrepreneurship.

Amid the complex and volatile domestic and international economic landscape, tax and fee reduction policies have fully leveraged their counter-cyclical regulatory role, delivering direct and tangible benefits to a broad base of taxpayers and payers, thereby stabilizing expectations for economic development. According to survey data from the tax authorities, 92.2% of taxpayers believe that these measures have had a positive impact on their business operations, bolstering the confidence of market entities.

In recent years, China has repeatedly refined and adjusted policies such as the additional deduction for R&D expenses, encouraging enterprises to allocate more funds to research and development and innovation. “Data show that in the first three quarters, 45% of manufacturing taxpayers used the benefits of tax and fee reductions to increase their R&D spending. According to monitoring by the tax authorities, the R&D expenditures of 100,000 key taxpayer enterprises grew by 19.3% year-on-year in the first three quarters, an increase of 3.4 percentage points compared with the full year of 2018,” said Cai Zili.

Data show that in the first three quarters, taxpayers in the private sector—including private enterprises and individual businesses—benefited from an additional tax reduction of 964.4 billion yuan, accounting for 64% of the total new tax cuts and representing the largest share of the benefits. Nationwide, 7.767 million newly established market entities (including individual business households) have completed tax-related procedures, with an average monthly increase of 863,000. “The tax and fee reduction policies have boosted entrepreneurs’ willingness to start businesses, enhanced the dynamism of market entities, and created more jobs,” said Cai Zili.

Helping to continuously optimize the business environment.

What new measures has the tax system introduced to create a more attractive business environment and advance the “delegation, regulation, and service” reform? In response to a reporter’s question, Fu Shulin, Director of the Tax Publicity Center and Deputy Director of the General Office of the State Taxation Administration, as well as its spokesperson, stated that the Administration recently issued the “Announcement on Further Simplifying Procedures for Handling Tax Administrative Licensing Matters.” Effective December 1 this year, procedures for the six remaining tax administrative licensing matters will be further streamlined, thereby reducing the burden on taxpayers and enhancing service efficiency.

For example, the processing time for three matters—approval of taxpayers’ applications for extension of filing deadlines, approval of the maximum invoicing limit for special VAT invoices, and others—has been shortened to within 10 working days; and the processing time for approving changes to taxpayers’ fixed tax amounts has been reduced to within 15 working days.

With regard to reducing the submission of supporting documents, for the approval of taxpayers’ applications for an extension of the tax payment deadline, five items of application materials—including the report on the extension of tax payment and the balance sheet—have been eliminated. For the approval of taxpayers’ applications for an extension of the filing deadline, applicants are no longer required to submit a separate explanatory statement; they need only provide brief relevant information in the application form.

Weihai Municipal Finance Bureau of Shandong Province: Adopting Multiple Measures to Boost the Transition from Old to New Growth Drivers

To ensure the smooth implementation of the city’s major project for transforming old and new growth drivers, the Finance Bureau of Weihai City, Shandong Province, has effectively leveraged fiscal policies, proactively pursued innovative approaches, and diversified its tools, providing robust support for this transformation from multiple angles and across various fronts.

I. Strengthen the coordinated integration of special funds.

First, in terms of work planning, efforts have been concentrated on accelerating the transition from old to new growth drivers and supporting the decisive battle to achieve this transformation. In 2019, a special fund of RMB 25 million was allocated to support key projects across the city aimed at fostering this transition. Second, a special fund of RMB 75 million was established to enhance industrial quality and efficiency, encouraging enterprises to increase investment, undertake technological upgrades, and develop intelligent manufacturing. Third, a total of RMB 81 million was earmarked for major science and technology initiatives, key R&D programs, and intellectual property, supporting the construction of priority innovation platforms and flagship projects at the MIIT Weihai Comprehensive Research Center for Electronic Information Technology, while also incentivizing enterprises to accelerate innovation through R&D subsidies and innovation vouchers. Fourth, a special fund of RMB 60 million was allocated to talent development, underpinning the launch of an upgraded version of the Weihai Talent Program, ensuring the effective implementation of national talent initiatives such as the “Ten-Thousand Talents Plan” and the “Thousand Talents Plan,” as well as provincial programs like the Taishan Scholar Program, and supporting talent‑related events such as domestic and international high‑level talent exchange forums, thereby effectively attracting and pooling diverse talent. Additionally, from 2017 to 2019, a cumulative RMB 150 million in special funds was allocated over three consecutive years to expedite the development of high‑end industrial parks, helping to establish a number of distinctive, technology‑intensive, industry‑leading, highly profitable, and strongly driving key industrial parks. This has significantly boosted the enthusiasm of all districts and cities to build such parks, yielding remarkable results.

II. Actively leverage the guiding and leveraging role of government-guided funds.

First, we coordinated closely with the Provincial New‑and‑Old Kinetic Energy Conversion Fund, subscribing to RMB 1 billion of its guiding fund and establishing the Weihai Industrial Development Fund for New‑and‑Old Kinetic Energy Conversion in Shandong Province, with a total scale of RMB 30 billion. This initiative aims to leverage social and financial capital to invest in Weihai’s key industries, sectors, and critical areas, while setting up sub‑funds and direct‑investment funds that precisely target the city’s priority industrial clusters, with a particular focus on manufacturing enterprises and projects boasting strong growth prospects. To date, Weihai has established 18 such industry‑specific sub‑funds and direct‑investment funds at the municipal level, supporting more than 90 investment projects totaling RMB 1.98 billion, thereby further alleviating financing constraints for businesses and accelerating the city’s transition from old to new growth drivers and its industrial upgrading. Second, we actively sought robust support from the Provincial New‑and‑Old Kinetic Energy Conversion Guiding Fund. As a result, we have secured investments from this fund in two Weihai‑based projects, including Hualing Electronics, amounting to RMB 215 million, achieving a leverage ratio of 1:10 for the municipal guiding fund. Third, we hosted a project‑promotion conference for the Shandong (Weihai) New‑and‑Old Kinetic Energy Conversion Fund, inviting 27 fund‑management institutions from both provincial and municipal levels. The event showcased 42 high‑quality industrial projects across the city, creating a “direct channel” for connecting capital with industry and supporting the high‑quality development of the city’s key industrial clusters.

III. Supporting Enterprise Development Through Multiple Channels

First, at the beginning of the year, a budget of RMB 34 million was allocated to support the development of the financial sector, with efforts made to guide credit allocation in a data‑driven manner, explore the establishment of an enterprise credit information system and a financial services platform, refine policies for science‑and‑technology‑related financing and the risk‑compensation fund for small and micro enterprises, and deepen the implementation of the “government‑bank‑insurance” policy framework, thereby further alleviating enterprises’ financing challenges. Second, PPP projects across the city were standardized and rectified, project‑database information was improved, and projects unsuitable for the PPP model were removed from the database. To date, the city has 29 projects on the roster, with a total investment of RMB 33.2 billion; among these, 21 are in the implementation phase, accounting for 72%—6 percentage points above the provincial average—and maintaining a consistently high project‑completion rate. Third, a full‑process online credit‑financing model for government procurement was piloted, and the Weihai Municipal Government Procurement Online Lending Platform was established, effectively addressing the liquidity and financing constraints faced by small and micro enterprises throughout the city and continuously enhancing awareness of and capacity to provide procurement‑related services to such businesses.

IV. Implement All Policies to Reduce Fees and Alleviate Burdens

Implement a dynamic public‑posting system for the fee‑schedule list, ensuring that “any changes are updated immediately, and no changes are updated monthly,” thereby guaranteeing the completeness and accuracy of the list. Clearly stipulate that any fee item not listed is unlawfully established and must not be levied under any circumstances. Establish a dynamic monitoring mechanism for enterprise‑related fees: first, set up fee‑monitoring stations; second, appoint enterprise‑fee supervisors; and third, institute a “direct‑line” monitoring system. Publicize across society the hotline numbers for reporting violations at the provincial, municipal, and county levels. Enterprises, all sectors of society, as well as fee monitors and supervisors, may report non‑compliant fee practices directly to the fiscal authorities at each level, creating a three‑tier coordinated response mechanism. All instances of unauthorized or excessive charges will be publicly exposed and rigorously addressed, ensuring that policies aimed at reducing fees and easing burdens are fully and faithfully implemented.

LITIGATION & ARBITRATION

The Ministry of Justice has issued the “Opinions on Promoting Lawyers’ Participation in Public Interest Legal Services,” under which public interest legal services will become a key component of lawyers’ performance evaluations.

In order to organize, guide, and support the broad community of lawyers in actively engaging in pro bono legal services, vigorously develop the cause of pro bono legal services, and promote the institutionalization and standardization of lawyers’ pro bono legal service activities, the “Opinions” set forth key measures to encourage lawyers’ participation in pro bono legal services across six areas:

First, expand the scope of services. Encourage and guide lawyers to provide pro bono legal services to vulnerable groups, including persons with disabilities, rural migrant workers, older adults, women, and minors; serve as legal advisors to villages (residents’ committees), offering assistance to urban and rural residents and grassroots self-governing organizations; participate in public‑interest rule‑of‑law publicity campaigns, serving as volunteers for legal education or legal‑rule‑of‑law mentors; provide free legal consultation through public legal service platforms or other channels; engage in rule‑of‑law‑based poverty alleviation efforts, volunteering as lawyers in border areas, underdeveloped regions, and ethnic minority areas; assist Party and government organs in handling letters and visits, mediating law‑related and litigation‑involved cases, responding to major emergencies, and carrying out urban management and law‑enforcement tasks; offer pro bono lawyer‑mediation services, voluntarily participating in people’s mediation, administrative mediation, judicial mediation, and sector‑specific or professional mediation; take part in pro bono “rule‑of‑law health checks” for private enterprises; conduct policy research, legislative analysis, academic exchanges, and talent development related to pro bono legal services; provide sponsorship or support for pro bono legal‑service activities; and undertake other forms of pro bono legal service.

Second, we will enhance the effectiveness of our services. We will prioritize key areas of service, focusing on meeting the basic legal needs of the public, and give priority to providing pro bono legal assistance to disadvantaged urban and rural residents and other vulnerable groups. We will strengthen legal services in vital areas such as labor, employment, social security, education, and healthcare, and proactively support major national development strategies, including poverty alleviation and pollution prevention. We will accurately identify the needs of our target audiences, tailoring our approaches to different constituencies and topics, and employ methods that are popular, easy to understand, and flexible and effective, thereby enhancing the relevance and appeal of our services. We will empower lawyers to independently select service content and delivery formats that align with their professional expertise, practical experience, and personal interests, thus boosting their engagement. We will innovate service models, explore an “Internet Plus” approach to pro bono legal services, and make full use of platforms such as the China Legal Service Network, WeChat, Weibo, and mobile apps to offer remote online services, including virtual consultations, intelligent diagnostic tools, and targeted information dissemination. In addition, we will strengthen collaboration with university legal clinics, relevant social organizations, socially responsible enterprises, and individual philanthropists, working together to carry out pro bono legal service initiatives.

Third, service requirements shall be clearly defined. Lawyers shall actively participate in public-interest legal service activities organized by Party committees and governments, judicial administrative organs, and bar associations. It is encouraged that each lawyer engage in no less than 50 hours of pro bono legal service annually or handle at least two legal aid cases. Localities may, in light of their respective levels of economic and social development and the realities of the legal profession, establish specific guidelines for the workload of pro bono legal services, and may set differentiated requirements based on factors such as the lawyer’s practice location, age, and physical condition. The methods for calculating the workload of pro bono legal services shall be determined by local judicial administrative organs and bar associations. Lawyers providing pro bono legal services must do so in accordance with laws and regulations, exercising due diligence and fulfilling their duties conscientiously; they may enter into service agreements with clients to specify the scope, methods, and working conditions of the services, standardize service procedures, and ensure service quality.

Fourth, enhance service capacity. Develop public-interest legal service institutions and a corps of pro bono lawyers, strengthen the volunteer legal‑service workforce, and raise the level of professionalism and vocationalization in public-interest legal services. Bar associations at all levels should establish dedicated committees for public-interest legal services and encourage the creation of specialized committees in areas such as the protection of minors. When organizing training programs—such as centralized orientation for aspiring lawyers, leadership‑development courses for industry leaders, and continuing education for young attorneys—bar associations must make public-interest legal‑service training a core component. Actively conduct diverse skill‑building workshops and forums on public-interest legal practice, and intensify research into the policies and theories underpinning such services. Furthermore, we will continue to refine and strengthen established public-interest legal‑service brands, including the China Legal Service Network, the “Lawyer Service Group Supporting Tibet,” the “1+1” Legal Aid Volunteer Program, and the “United Hearts · Lawyer Service Group.”

Fifth, emphasis should be placed on setting examples and providing leadership. Judicial administrative organs and bar associations at all levels ought to proactively cultivate and recognize exemplary lawyers who excel in public-interest legal services, and to summarize and disseminate effective experiences and practices. Lawyers who are members of the Communist Party of China, those serving as deputies to the People’s Congress or members of the Chinese People’s Political Consultative Conference, past recipients of awards and honors conferred by bar associations, as well as presidents, vice-presidents, chairpersons of the supervisory board, executive directors, and renowned lawyers, should all assume leading roles in public-interest legal services. Young lawyers and trainee lawyers should be encouraged and supported to participate in such services, thereby enhancing their professional ethics and competence through practical experience. All law offices—particularly large and well‑known ones—should actively organize and support their attorneys in engaging in public-interest legal services, providing appropriate safeguards in terms of time allocation, funding, facilities, and performance evaluation.

Sixth, conduct performance assessments and evaluations. When lawyers and law offices engage in pro bono legal services, they should diligently maintain relevant records of their work. In carrying out annual practice assessments for lawyers and annual inspections and evaluations of law offices, judicial administrative authorities and bar associations shall, in accordance with administrative regulations such as the Measures for the Annual Inspection and Evaluation of Law Offices and relevant industry standards, treat the provision of pro bono legal services as a key component of the assessment. Furthermore, they should refine an evaluation mechanism that integrates feedback from the competent industry authorities, bar association reviews, public assessments, and self-assessments by service providers, linking the resulting evaluation outcomes to the recognition and awards granted to law offices and individual lawyers. To fully leverage the vital role of lawyers in advancing the rule of law across the board and better meet the growing demand for legal services among the general public,

Blockchain-based smart contract technology has been put into practical use, with the Beijing Internet Court achieving the nation’s first “one-click case filing” for enforcement proceedings.

　Recently, in an enforcement case, the Beijing Internet Court leveraged the judicial blockchain “Tianping Chain” to embed a smart contract on the chain, successfully initiating automatic enforcement proceedings for the nation’s first mediation agreement. This marks the practical application of blockchain-based smart contract technology.

This case is a dispute over online infringement. Following mediation presided over by the court, the plaintiff and defendant reached a settlement agreement. The agreement stipulates that the defendant shall pay the plaintiff compensation in the amount of RMB 33,000 no later than October 16, 2019. At the same time, the Beijing Internet Court informed both parties that, should the defendant fail to perform its obligations within the prescribed period, automatic enforcement would be triggered through blockchain-based smart contract technology.

After the mediation agreement takes effect, both the parties’ and the judge’s interfaces display the term “smart contract” to distinguish this case from ordinary ones. On October 17, the defendant had still failed to pay the RMB 20,000 in compensation. The plaintiff simply needs to click the “Not Fully Executed” button, and the case is immediately routed to the Internet Court’s Case Filing Division for enforcement filing. Following review by the filing division, once the filing is approved, the case is entered into the enforcement system. Party information, the enforcement application, and the enforcement basis all require no manual entry or upload; they are automatically retrieved via blockchain-based smart contract technology, enabling enforcement filing to be completed with a single click.

It is understood that the judicial blockchain “Tianping Chain,” spearheaded by the Beijing Internet Court, was among the first blockchains to be filed with the Cyberspace Administration of China. This authoritative evidence‑preservation platform addresses the longstanding challenges of storing, collecting, and authenticating electronic evidence. The blockchain‑based smart contract framework comprises several steps: multiple parties draft a smart contract (such as a mediation agreement), deploy the contract, and trigger its execution upon fulfillment of predefined conditions. In this case, based on the performance conditions stipulated in the mediation agreement, online contract nodes were deployed, and once the parties conofficeed the status of performance, corresponding enforcement actions were initiated. For instance, if both parties certify that performance has been fully completed, a performance‑status report is automatically generated and recorded on the Tianping Chain; if they conoffice that performance remains incomplete, an “unfulfilled‑performance” report is triggered, which in turn automatically generates an enforcement application, retrieves the parties’ information, pulls the relevant enforcement basis, initiates case filing, and produces an enforcement notice and a property‑reporting order.

According to reports, the integration and application of smart contracts within judicial blockchains can deliver multiple benefits: they transcend linguistic limitations, preventing misunderstandings arising from language ambiguities, as code—being a computer language—is precise and unambiguously specific; they reduce human intervention, fostering smarter, more open, and transparent enforcement; they streamline case handling, boosting efficiency and enabling swift execution for straightforward cases and meticulous enforcement for complex ones, thereby alleviating pressure on judicial resources; and they enhance public access to justice by enabling one-click filing of enforcement proceedings.

Zhang Wen, President of the Beijing Internet Court, stated that the practical application of blockchain smart contract technology enables the deep integration and utilization of on-chain data with off-chain judicial information systems, helping to break down information silos. This innovative use of blockchain in the judicial field also represents a proactive measure by the Beijing Internet Court to further enhance convenience for parties involved and consolidate the achievements made in addressing the longstanding challenge of enforcing court judgments.

“We have been developing an innovative execution model for smart contracts for a long time. From experimentation to implementation, the judges have worked diligently and steadily, ultimately enabling this enforcement case to proceed smoothly. We tackle each challenge as it arises, and we look forward to the transformative impact that new technologies will bring to enforcement work. We will also continue to explore and innovate within the internet‑based judicial framework,” said Zhang Wen.

After failing to recover his wages, he resorted to stealing property from his employer’s home as “compensation.”

Recently, the Huishan People’s Court concluded a theft case. After repeatedly demanding his wages from his employer without success, the defendant, Li, hatched the ill‑conceived scheme of “if you owe me, I’ll just take it back myself,” and seized the opportunity to steal property from his employer’s home, ultimately facing legal punishment.

Starting in June 2018, Li worked for a company owned by Wang Fei (pseudonym). In December 2018, due to poor business performance, Wang Fei decided to dissolve the company and lay off all employees. At the time, Wang Fei promised to pay Li over 12,000 yuan in wages and severance, but he failed to honor this commitment. Consequently, Li filed for labor arbitration; however, Wang Fei did not accept the arbitration ruling. “I’m not going to pay you—nor do I have the money. Take it to court,” Wang Fei reportedly told him. Despite repeated attempts by Li to reach an agreement, Wang Fei consistently refused to make any payment.

“Filing a lawsuit costs money, and hiring a lawyer does too—when you add it all up, it’s quite an expense. Since he refuses to pay, I’ll find a way to get my money back myself!” In order to recover his wages, Li tracked down Wang Fei and learned his home address. Consequently, Li decided to break into Wang Fei’s house when no one was there and “take some money” from him.

Accordingly, on a day in late March 2019, Li carried a backpack and waited beneath a certain apartment building in the residential complex where Wang Fei lived. That evening, Li saw Wang Fei enter the building, after which the lights in Apartment A on the third floor flickered on faintly. “So Boss Wang lives in Apartment A on the third floor!” Convinced he had learned Wang Fei’s exact address, Li left, planning to return in a few days to “try his luck.” On an evening in early April, around 10 p.m., Li returned to the base of Wang Fei’s building. Finding no lights on any floor from the second to the fourth, he conofficeed that no one was home and, using the security window bars and the air-conditioning unit as footholds, scaled the third floor by hand. By chance, the occupant of Apartment A on the third floor had not installed security bars, and one of the windows was even unlocked, allowing Li to slip into the room with ease. However, once inside, he discovered that the photograph hanging on the wall was not of Wang Fei, realizing he had entered the wrong apartment. With night already falling, Li simply decided to spend the night there.

The next day, Li spotted through the north-facing window that Wang Fei’s family had emerged from Room A on the second floor and locked the door behind them. Judging that the “perfect moment” had arrived, he descended along the balcony and slipped into Wang Fei’s home via an unlocked security‑window access panel. After rifling through the premises, he located a handbag containing gold and silver jewelry, along with some loose change. With these items in hand, Li returned to Room A on the third floor, rummaged through the family’s wardrobe and shoe cabinet, and donned a new pair of trousers and a fresh pair of leather shoes. Moreover, he arranged for the lock on Room A’s door to be changed, planning to come back later to “try his luck” again.

A week later, Li, having returned from his hometown, went back to Room A on the third floor and found he could not open the door, realizing that his scheme had been exposed. Panicked, Li dared not return home; he lied to his wife, claiming he had secured a new job and was staying in company dormitories, while simultaneously seeking out various small hotels to hide. However, justice ultimately prevailed, and Li was apprehended by the police. It was determined that the stolen items were valued at over RMB 19,000. Following the case’s resolution, Li’s family reimbursed the victims for their full losses.

The Huishan People’s Court, after trial, held that the defendant, Li, with the intent of unlawful possession, entered a residence and secretly stole another person’s property in a significant amount, thereby constituting the crime of theft. The charges brought by the public prosecution authority were substantiated and were upheld by the court. In view of the defendant Li’s voluntary admission of guilt and the fact that the victim’s losses have been recovered, a lighter sentence was imposed. In accordance with the principle of proportionality between crime and punishment, the court sentenced the defendant Li to one year and six months’ imprisonment for the crime of theft, together with a fine of RMB 2,000.

Judge’s closing remarks: The protection of one’s own rights and interests must be lawful and rational.

With the rapid development of the economy and society, disputes between workers and employers have become increasingly frequent. As a worker, when your rights are violated, it is essential to remain rational and seek redress through proper, lawful channels. Do not, like the defendant Li in this case, resort to stealing from your employer’s home in an attempt to recover unpaid wages—such actions ultimately violate the law, leaving you not only without your wages but also behind bars. In addition, the public is reminded to further enhance their awareness of theft prevention: before leaving home, carefully check that security doors and windows are functioning properly and lock them promptly, so as to deny criminals any opportunity to take advantage.

The leased premises do not meet the requirements for operating an educational institution; the request to terminate the contract was dismissed.

Recently, the Zhangjiagang People’s Court concluded a dispute over a lease contract.

On March 1, 2016, a certain cooperative entered into a lease agreement with Li, under which the cooperative leased a commercial premises—registered in the real estate registry as having a gross floor area of 386.61 square meters and designated for commercial services (retail space), located in a residential complex that had passed fire safety inspection on January 27, 2015—to Li for a term from March 2016 to February 2019. Subsequently, a third-party training company, whose legal representative was Li, undertook renovations to the leased premises and commenced operations, advertising itself as a children’s English‑language training center; however, it failed to obtain an educational institution license. In May 2018, the education, fire safety, market supervision, and urban management authorities jointly conducted an inspection of the training company and prepared a corresponding “Record of Preliminary Survey of Off‑Campus Training Institutions (Unlicensed or Illegally Operating),” which stated the education authority’s preliminary opinion as follows: the premises are residential in use, do not meet the requirements for operating an educational institution, lack a valid fire safety certificate, and it is recommended that the operator select an alternative location and cease operating beyond the permitted scope. The fire safety officer’s preliminary assessment indicated non‑compliance with fire safety regulations, failure to complete the requisite fire‑safety procedures, and the presence of only one emergency exit and two fire extinguishers. The market supervision authority advised: first, to obtain the necessary license and then amend the business license accordingly; second, to revise any outdoor advertising. The urban management authority noted that the name displayed on the storefront did not match the name registered on the business license and ordered corrective action. Despite these findings, the training company still failed to secure an educational institution license. Consequently, Li brought suit before the court, seeking to terminate the lease agreement with the cooperative and recover damages for renovation costs and other losses.

After trial, the court held that the House Lease Agreement entered into by both parties does not violate any mandatory provisions of law and is therefore lawful and valid. The defendant, a certain cooperative, holds the right to use the property in question and has duly performed its contractual obligations; accordingly, the plaintiff, Li,’s claim seeking to rescind the contract and to recover damages from the defendant, the cooperative, is unfounded. First, based on the registered floor area and intended use of the property as recorded with the real estate registration authority, the premises delivered by the defendant, the cooperative, to the plaintiff, Li, and subsequently occupied by a third party, a certain training company, are consistent with the terms of the House Lease Agreement between the parties. Second, the property has already passed the fire safety inspection in its entirety; however, the third‑party training company, as an independently operated commercial entity, failed to meet the relevant fire safety requirements, and its failure to obtain the requisite fire safety permits cannot be attributed to the defendant, the cooperative. Furthermore, the House Lease Agreement contains no provision allowing the lessee to terminate the contract. Thus, the plaintiff, Li’s request to rescind the contract does not satisfy the statutory prerequisites. In sum, the fact that the third‑party training company was unable to obtain an educational license due to non‑compliance with applicable regulations and policies does not constitute the responsibility of the defendant, the cooperative. Accordingly, the plaintiff’s claims lack both factual and legal basis, and the court rejects them.

[Judge’s Commentary] The lease agreement at issue stipulates that the defendant leased the store premises to the plaintiff for “commercial use.” According to the land-use right certificate and the real estate registry for the parcel where the property is located, as provided by the plaintiff, the parcel includes commercial‑service land, and the property itself is designated for “commercial services (shopfront).” Furthermore, the construction project to which the property belongs has been certified as having passed fire safety inspection. Accordingly, it should be determined that the property delivered by the defendant to the plaintiff complies with the terms of the lease agreement. The lease contract does not specify that the plaintiff’s intended use of the leased premises is for educational purposes, nor does it impose on the defendant the obligation to obtain an educational‑institution license. Therefore, the plaintiff’s failure to secure such a license due to non‑compliance with relevant regulations and policies cannot be attributed to the defendant.

As “Double 11” approaches, numerous e-commerce platforms are offering specially discounted “foreclosure properties,” while judges warn of bidding risks.

In September this year, Nanjing City saw 110 judicially auctioned properties sold on Alibaba’s auction platform, with a sell-through rate of 60.8% and total sales exceeding RMB 350 million. Currently, 99% of courts nationwide have joined Alibaba Auctions to conduct judicial auctions. Huang Tao, deputy director of the Enforcement Command Center of the Jiangsu Provincial Higher People’s Court, stated: “Starting January 1, 2014, all three levels of courts in Jiangsu Province have been integrated into Taobao’s Alibaba Auctions platform, with every property being auctioned online. Each court maintains a dedicated store on Taobao.”

Low prices are the primary reason why foreclosed properties are so popular. Cheng Min, co-founder of Tonglun Paipai Technology Service Co., Ltd., explains: “Foreclosed homes typically sell at about 70% of market value, and the second auction offers a further 20% discount on top of the first‑auction starting price. Taken together, this means foreclosed properties can be purchased for as little as 56% of their market price. In September this year, in Nanjing, a property in Gaochun District with a market value of roughly RMB 1.55 million sold for just over RMB 910,000—more than RMB 630,000 below market price, or about 59% of its original value.”

Huang Tao cautions that bidding on foreclosed properties carries risks: “Each auctioned property comes with a public notice; be sure to carefully review the details regarding the property’s condition, any encumbrances, the starting bid price, the amount of the deposit, and the allocation of taxes and fees.”

Real estate commentator Yin Xiaofei said that the growing transparency of the housing market is a key factor behind the rising interest in and increased transaction volume of foreclosed properties, adding that auction announcements must be scrutinized carefully. “Before a property is put up for judicial disposal, a thorough investigation is conducted, covering aspects such as ownership, co‑owners, property type, creditor‑debtor relationships, occupancy and usage, location and layout, ancillary facilities, interior finishes and fittings, as well as any known defects—all of which are detailed in the auction notice.”

In the market, many intermediary agencies lure consumers with promises such as “guaranteed successful bidding” and “guaranteed prices.” Judges caution that, to date, the Supreme People’s Court’s roster of online judicial auction service providers includes seven platforms: Taobao, JD.com, the People’s Courts’ Litigation Assets Network, Gongpai.com, the China Auction Industry Association Website, ICBC RongeGou, and the Beijing Equity Exchange.

“You should bid on foreclosed properties through these seven platforms. Once you’ve set your sights on a property, it’s advisable to inspect it in person and thoroughly assess its condition,” Huang Tao advises.

Foreclosed properties resemble secondhand homes but differ in certain respects, and the entry barriers for service providers are relatively high. Li Xiaoyu, President of Tonglun PaiPai and Chairman of Niu PaiPai, analyzes: “The higher people’s courts in each province require auction‑supporting agencies to meet specific qualification criteria—such as minimum registered capital, the company’s R&D capabilities to support the development of smart courts, whether the office has been in operation for more than two years, and whether it has already established a presence in a sufficient number of courts.”

If a bidder successfully wins a judicially auctioned property but then changes their mind and decides not to purchase it, what losses must the buyer bear? As many may recall, a few years ago, someone maliciously bid on a mobile phone at a winning price of 270,000 yuan, which alarmed the purchaser. The buyer subsequently withdrew from the transaction at the court’s request and was ultimately fined 10,000 yuan; another malicious bidder was fined 20,000 yuan. If a bidder reneges after winning a judicial auction, they will not only forfeit their deposit but also be required to pay the difference between the hammer price and the market value, and they will be disqualified from participating in any future auctions.

Huang Tao stated: “Participating in a judicial auction is your right, but exercising that right must not be done arbitrarily. According to Article 24 of the Supreme People’s Court’s Regulations on Several Issues Concerning Online Judicial Auctions, if a buyer reneges after the auction has concluded, the deposit paid will not be refunded—meaning it will be confiscated. Furthermore, the Jiangsu High People’s Court has introduced a ‘price‑difference recovery’ measure for cases involving malicious bidders. For example, suppose you bid very high this time and the property sold for 1 million yuan, but then you decide not to proceed. If your deposit was 100,000 yuan, that amount will be forfeited. Moreover, if the property is subsequently re‑auctioned and sells for only 800,000 yuan, the 200,000‑yuan shortfall will be borne by the malicious bidder.”

At present, 99% of courts nationwide have established online judicial auction platforms. How effective have these platforms been? Huang Tao cited a set of statistics to highlight the “three highs and one low” of online judicial auctions: “The transaction rate is relatively high, the final sale prices are comparatively favorable, and the efficiency of disposing of assets is notably improved. Meanwhile, the rate of unsuccessful auctions is very low, with zero commissions, zero violations, and zero complaints—clearly demonstrating numerous advantages. From January 1, 2014, to October 30 this year, courts across the province conducted online auctions for a total of 157,754 items, generating sales totaling RMB 237.028 billion, with real estate and vehicles accounting for the vast majority of the assets involved. The premium rate reached 204.75%, and the conversion rate stood at 84.7%. Compared with traditional auctions, the overall efficiency remains exceptionally high.”

Foreclosure property notices typically stipulate “vacant possession upon delivery,” meaning bidders must first post a deposit equal to a specified percentage of the property’s appraised value. Once the auction is won, they are generally required to pay the full balance within one month, highlighting the considerable financial pressure involved. In 2017, the Nanjing Intermediate People’s Court launched a margin‑deposit insurance program. This May, the Sihong County People’s Court in Suqian partnered with banks and insurance companies to introduce mortgage financing for foreclosed properties—a pioneering initiative in Jiangsu Province. Pan Wei, deputy general manager of the Financial Markets Department at Sihong Rural Commercial Bank, explained: “We can ensure that the funds are transferred to the court’s account within three days, and afterward we work closely with the client and the insurer to help them obtain the property title.”

Huang Tao stated that the court will further ensure strict adherence to the objective and accurate description of assets as set forth in the public notice, and will strengthen coordination with financial institutions and real estate registration authorities. He added: “In terms of procedural handling, we will work closely with the relevant real estate registration agencies and property transaction departments to streamline these processes, enabling bidders to complete all necessary formalities in a one-stop service.”

Other

The revised Regulations on the Implementation of the Food Safety Law will take effect in December, with penalties now explicitly tied to “individuals.”

The implementing regulations for the “strictest-ever” Food Safety Law—the Regulations of the People’s Republic of China on the Implementation of the Food Safety Law (hereinafter referred to as the “Regulations”)—will officially come into force on December 1. Following the entry into force of these Regulations, all violations of food safety laws and regulations will be subject to the most stringent oversight.

Compared with the draft amendment to the Regulations for the Implementation of the Food Safety Law published in 2015 by the former State Food and Drug Administration, the new Regulations have expanded from 10 chapters and 64 articles to 10 chapters and 200 articles. They further refine provisions on strengthening corporate principal responsibility, enforcing “penalties imposed on individuals,” and regulating health foods, thereby underscoring China’s high priority on food safety.

Penalties are clearly assigned to “individuals.”

In the past, when food safety violations occurred, it was not uncommon for companies to bear the brunt of the consequences and for the legal representatives to be penalized, while the real masterminds behind the scenes remained unscathed. Going forward, such situations may no longer arise.

The Regulations explicitly stipulate that penalties shall be imposed on individuals. For food safety violations that fall under any of the following circumstances—intentional commission of the violation, particularly serious nature of the violation, or severe consequences resulting from the violation—besides imposing administrative penalties on the entity in accordance with the provisions of the Food Safety Law, the legal representative, principal person in charge, directly responsible supervisory personnel, and other persons directly liable shall each be subject to a fine ranging from one to ten times their income derived from the entity in the preceding year.

The standards are clearer.

The Regulations have refined, emphasized, and supplemented the regulatory requirements for health foods, infant formula, and food purchased online.

Article 12 of the Regulations stipulates that special foods, such as health foods, formula foods for special medical purposes, and infant formula, do not qualify as local specialty foods and may not be subject to the formulation of local food safety standards. Article 38 provides that no other foods, apart from health foods, may claim to possess health‑promoting functions.

In addition, the Regulations prohibit the use of any means—including conferences, lectures, and health consultations—to engage in false advertising of food products. This measure also leaves no hiding place for the illegal “conference‑style sales” of health supplements targeting elderly consumers that have become prevalent in recent years.

Emphasize “imposing heavier penalties”

The Regulations also send a strong signal that all types of food‑related violations and illegal activities will be vigorously prosecuted, while providing food safety regulators with clear guidelines to follow. For example, Article 67, Paragraph 1 explicitly lists several specific circumstances deemed “serious,” including: where the value of the products involved in the violation exceeds RMB 20,000 or the duration of the violation lasts more than three months; where a foodborne illness results in fatalities, or where 30 or more people are affected by a foodborne illness without any fatalities; or where false information is deliberately provided or true facts are concealed.

In addition, the Regulations designate the establishment of traceability systems for infant formula and other foods intended for specific population groups, as well as for other foods with higher safety risks or high sales volumes, as a key focus of oversight and inspection by food safety regulatory authorities. The Regulations also stipulate that canteens at centralized catering facilities—such as schools, childcare institutions, elderly care facilities, and construction sites—must implement systems for raw material control, cleaning and disinfection of tableware and drinking vessels, and food sample retention, and conduct regular self-inspections of food safety in accordance with the law. Furthermore, the Regulations emphasize that the production and marketing of genetically modified foods must be clearly labeled, with labeling requirements to be formulated jointly by the State Council’s food safety supervision authority and the State Council’s agricultural administrative department.

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